Correlation Between Mercury Systems and Eve Holding
Can any of the company-specific risk be diversified away by investing in both Mercury Systems and Eve Holding at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Mercury Systems and Eve Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mercury Systems and Eve Holding, you can compare the effects of market volatilities on Mercury Systems and Eve Holding and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Mercury Systems with a short position of Eve Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercury Systems and Eve Holding.
Diversification Opportunities for Mercury Systems and Eve Holding
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mercury and Eve is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Mercury Systems and Eve Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eve Holding and Mercury Systems is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Mercury Systems are associated (or correlated) with Eve Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eve Holding has no effect on the direction of Mercury Systems i.e., Mercury Systems and Eve Holding go up and down completely randomly.
Pair Corralation between Mercury Systems and Eve Holding
Given the investment horizon of 90 days Mercury Systems is expected to under-perform the Eve Holding. But the stock apears to be less risky and, when comparing its historical volatility, Mercury Systems is 2.6 times less risky than Eve Holding. The stock trades about -0.02 of its potential returns per unit of risk. The Eve Holding is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 530.00 in Eve Holding on November 3, 2024 and sell it today you would lose (17.00) from holding Eve Holding or give up 3.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercury Systems vs. Eve Holding
Performance |
| Timeline |
| Mercury Systems |
| Eve Holding |
Mercury Systems and Eve Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercury Systems and Eve Holding
The main advantage of trading using opposite Mercury Systems and Eve Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercury Systems position performs unexpectedly, Eve Holding can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Eve Holding will offset losses from the drop in Eve Holding's long position.| Mercury Systems vs. Curtiss Wright | Mercury Systems vs. Hexcel | Mercury Systems vs. Ducommun Incorporated | Mercury Systems vs. Woodward |
| Eve Holding vs. Heico | Eve Holding vs. Mercury Systems | Eve Holding vs. AeroVironment | Eve Holding vs. Howmet Aerospace |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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